Essay 1: Application of Value Curve Tool
The value curve is regarded as the tool for strategic management for the managers in order to assess visually how their strategy is working in respect to the close competitors (Osterwalder et al., 2015). To put this tool in effect there are two industry that has been selected that have introduced this strategy namely the retail industry and Alibaba online store. Alibaba is one of the largest online store in the world and operates in the highly competitive market. The company is required to redefine its proposition to expand its consumer base. By turning the idea of marketing retail goods through online Alibaba has redefined how the consumers can enjoy the experience of online shopping environment by introducing home delivery, convenience, and wide range of selection and price considerations, which is ignored by the traditional retail industry.
Traditionally the retail industry key factors that were involved in the competition of this industry was based on price, quality, availability and locations of the stores. However, with the introduction of online mode of service Alibaba ventured the idea of creating new factors were none of its competitors was doing (Ballard et al., 2015). This comprised of the variety, convenience through customer service, Wide range of brand aspirations and speed of delivery. For Alibaba it is not just about few retail products but it has introduced a wide number of products and drinks, which can meet the needs of the audience and the same, can be enjoyed in the social settings where the customers can read, relax and socialize themselves with the products offered.
Alibaba focussed on getting the right talent that are trained well and can gain the benefit that directly contributes to the success of the organization thereby delighting the customers. The company accelerated Alibaba to become the international brand, which helped in creating an aspirational brand, which the consumers wanted to experience in the digital retail industry and turn into the day-out experience where they can access wide range of products. In the digital background, Alibaba has the significant role to play in providing brands to re-assess their proposition by reconsidering the value for the end users. With the help of value curve tool it helps in proving the company with the platform so that it can indulge with their customers and re-appraise where the competitions is presently prevalent and where the opportunity lies in creating an uncontested market place. If Alibaba were to create value for its retail products the key factor that is involved in the competition is the product range, price, delivery and variety.
As evident from the curve competitors have been put under one generic category and it is listed in blue. Because of the competitive nature of the industry, the point of price for many is the place where the competition is and it is considered very important. Unlike the traditional retail market, Alibaba saw an opportunity that would be helpful in creating new factors in providing an uncontested market place. Alibaba by interacting with the present set of customer base the company has been able to set an online community that forms the part of the business operations and simultaneously, it has successfully resurrected the idea of promoting brand loyalty among the consumer.
Different strategies might be undertaken by the traditional retail industry with respect to the pricing of the products. On a general note, the traditional retail industry make profit in two ways. They either make profit by selling in large volume or make a small margin of profit on each unit or making a large sum of profit on each of the unit and settling for lesser volumes. Traditional retail firms in most of the markets are better off if the market is balanced where some of the firms compete on the price and other firms compete on the features such as varied taste and preference for different segment.
The same idea is applicable to the Alibaba where it compete with the traditional retail based on services by charging small margin on each unit. One of the central issue for traditional retail marketing is the value chain where the part of the added costs reduces the margin of profit. Similarly, the value chain of the Alibaba provides the company with an opportunity to add value its products. These ultimately increases the prices however such added costs is resultant from the consumer demand where consumers are generally willing pay for the extra convenience.
Essay 2: Value Innovation Brainstorm
Analysis of the operations of the firm Alibaba Group reveals the fact that the success and speedy growth is essentially built on the strength of entrepreneurship, innovation and an unwavering focus on satisfying the requirements of the customers. Creative thinking can help in generating innovative value initiative.
Competitive rivalry can be observed to be very strong that can drive the company Alibaba to alter its strategy and remake all their decisions. The company Alibaba encounters severe competition from several rivals. There are many online sites both within as well as outside China. For example, eBay as well as amazon.com are among the competitors of the firm. Again, within different nations, Alibaba faces severe competition from companies such as Daraz.pk and Yayvo.com among many others. Thus, it can be hereby said that the company competes against various firms counting smaller online retail firms and larger ones. Again, the global scope of the business of e-commerce also exposes the company to different external forces (Strauss, 2016). In this situation, the company has the need to ensure that it can remain resilient amidst altering conditions of the entire online business environment. For instance, Alibaba might continue to boost its strong brand image which is necessarily the strongest in the industry. Again, counterfeit reduction might also enhance experience of the customers in utilizing the e-commerce website. Further, the management of the company might also counteract the severe threat of substitution by delivering more attractive and superior quality service (Sharma, 2015). Let’s say, the company can enhance the overall usability of the website by optimizing the user experience.
Alibaba competes not only within the own industry but also with organizations operating in other industries. There are big players in the e-commerce businesses and nowadays many businesses are opening up their own online platform as well. Therefore, Alibaba can consider opening up new market avenues in online retail with inclusion of diverse categories of services/products in order to enhance their sales potential.
Strategic groups operating within the sector are essentially a wide group of corporations within a specific industry that assume similar strategies. In essence, strategic groups consist of hierarchical orders based on two different dimensions, namely price as well as performance. Analysis of operations of Alibaba reveals that the company has economies of scale and has lower operating costs, so they can offer lower prices without compromising with the profit. Therefore, by looking across strategic groups, it can be said that Alibaba can opt to trade up for the targeting the middle market segment (particularly small and medium enterprises) by offering high quality services/products services at affordable rates. However, the company’s targeted market segments can be provided excellent service support for attracting as well as retaining different users especially to those subscribed members and gain competitive advantage (Szolnoki et al., 2016).
There are chains of buyers who are essentially directly or else indirectly engaged in purchasing decisions. The chain of buyers mainly include buyers who pay for the products or else services, users who utilize the product in actual, influencers who play an important role in framing decisions, intermediate buyers who are necessarily traders and regulators who too influence the decisions to purchase. E-commerce businesses are every day opening up new virtual doors and customers these days have the power to select between multiple brands to suit their needs. Therefore, the company consider trying something different and augment or even replace the traditional model for their retail segment. Social media can in this case play a vital role in the process of sales and lure the client in a very real way. When individuals acquire value from company’s blog, news from Twitter as well as Facebook page of the company, and get entertained on both YouTube and Instagram, customers will want more. The entire chain of buyers might feel a deeper connection to the brand and what the brand offer, and are more prone not only to purchase once, but also to become loyal to the brand and recommend it to others. The word-of-mouth in the Social media can also act as an advertising field, permitting virtually anybody to tap into the unfailing form of marketing that is the trusted recommendations (Grönroos & Grönroos, 2016). The company can also eliminate the e-commerce component by taking as well as fulfilling orders right on facebook. The company’s updated facebook page can display the photos of the items where customers can comment on with their required specification and provide email address. The company can directly send the invoice for the purchased product and swiftly ship out the same without any hassle. Development and continuous up gradation of mobile app for selling can also help in boosting loyalty of chain of buyers.
In majority of industries, competitors enter within the boundary of product as well as service offerings of the industry. Management of the company might consider identifying diverse pain points that are essentially the constraints of the consumers and try to eliminate the same through different complimentary products or else service offerings (Thomas, 2013). For example, it can be observed the customers intend to experience the products before making purchases. Therefore, the company might consider providing the service of accepting returns of certain products if it does not suit the needs of the clients even after shipping and delivery and remove the inconvenience of e-commerce. In this case, Alibaba too can consider making customised offerings to tailored to the needs of the SMEs along with service support as required. The company can design customized solutions as well as tools as per the specific needs of the businesses.
Competition necessarily tends to meet on one of two potential base of appeal. These necessarily include the extras that the company offers that raise the cost of company’s product without augmenting functionality. Thus, by eliminating or else reducing the redundant factors, the company Alibaba can frame a simple, purposeful, lower-priced, low-cost offerings that would radically raise value’ of the purchasers. The functional appeal indicates towards the functionality utility that all the purchasers receive from a specific business. The management can reduce the waiting time that can be considered to be a functional aspect in this e-commerce industry (Grönroos & Grönroos, 2016).
The company can generate reactive strategies that can permit in adapting to new identified trends. The rate of national internet penetration, online shopping market growth rate, growth of B2B e-commerce market and the use of third party ecommerce show a rapid trend of growth. Alibaba has already effectually developed a premier brand in the domain of ecommerce with the highest traffic among different B2B marketplaces. In this situation, the company can consider diversifying its businesses for gaining competitive advantage over rivals. However, the trends also show that e-crimes have also increased along with swift evolution of the entire online as well as mobile channels. Therefore, the company can take into account security of the services, enhance the same, and provide higher protection to the customers’ data (Strauss, 2016). The management of the company need to deal with the ever-increasing risks to protection of the clients, continuity, fiduciary accountability, as well as operations by delivering richer ecommerce service that is integrated through multiple remote as well as digital channels. Introduction of stringent compliance obligations with augmented scrutiny of organizational resilience can help in handling malicious threats targeting ecommerce as well as retail service corporations and save reputation of the brands (Strauss, 2016).
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